Hi all — Many jurisdictions exempt silver bullion from consumption taxes like VAT and sales taxes, and many don't. I'm interested in your feedback on how such an exemption should be designed. For the reasons given below, it's probably not as simple as just saying "exempt all bullion". For one thing, laws generally need to define their terms and clarify ambiguities. I'm going to assimilate all the feedback before I prepare to lobby some US state legislatures to enact or revise silver sales tax exemptions. Note that there are two rationales for exempting silver. 1) It's an investment, and we don't levy consumption taxes on investments (e.g. stocks and bonds). 2) It's a monetary equivalent, or at least similar to money, and we don't levy consumption taxes on money (e.g. currency exchange). Given those rationales, the type of silver that most merits an exemption is standard silver bullion: ungraded coins, bars, and rounds. Things get murkier when we move to graded, slabbed coins, and high premium proofs, commemoratives, limited editions, Marvel superhero coins, silver bullets, trinkets, and doodads. A lot of that stuff can be classified as collectibles and toys, and therefore the sort of consumption that economists would recommend levying consumption taxes on. However, I think the silver content of just about anything should be exempt. So I've landed on a formula that takes melt value and adds a premium allowance. The premium allowance would be sized to fully exempt standard bullion, while triggering tax on the increment above the allowance, if any. One advantage of this approach is that we don't have to define what is and is not standard bullion – the formula handles that for us. Examples: Let's say our allowance is 25%, so 1.25 × melt value would be tax exempt. With spot at say $18.00, anything priced at $22.50 or below per ounce would be exempt. Under normal circumstances, that would comfortably exempt ASE, the highest premium coins, in North America at least. But a graded, slabbed ASE priced at $38.00 would trigger tax on the increment above $22.50. Same with a Nuie Marvel superhero coin costing $55.00. What do you think of the melt + premium allowance approach? Can you think of better approaches? (I have some modifications designed to exempt fractional silver, which tends to have much higher premiums but is still standard bullion.) This approach would operate similarly for both sales tax jurisdictions (USA) and VAT/GST jurisdictions (everywhere else). Thanks.
Gold and silver is God's money and as money it should be exempt from paying capital gains tax on it but our criminal overlords see otherwise.
I never pay capitol gains but then again I dont file taxes either haha. They can suck a fat one. I'm a simple man.
I'm not sure if these examples will help but more examples are available to peruse at the Australian Taxation Office. https://www.ato.gov.au/Business/GST...harge-in-the-valuable-metals-industry/?page=4 Example 1: Mixed metals – voluntary reverse charge A jewellery manufacturer frequently supplies valuable metal goods that contain gold of varying fineness combined with varying amounts of low-value metals, such as copper, to a retail jewellery store. It would not be practical to distinguish which supplies fall above and below the 10% threshold. In such a situation the jewellery manufacturer could enter into a written agreement with the purchaser of the goods to voluntarily reverse charge all their supplies. This would remove the need to apply the 10% threshold test on the individual metals supplied. Example 2: Jewellery business-to-business reverse charge transaction There may be circumstances when manufacturers, wholesalers and jewellers sell surplus or damaged stock to be refined. In these circumstances the jewellery may be sold for the value of its valuable metal content. In this scenario, as the jewellery is being sold for its valuable metal content, the price paid for the jewellery may be less than 110% of the value of the valuable metal and the reverse charge would apply. Example 3: Jewellery business-to-business GST transaction (no reverse charge) A manufacturer makes a piece of jewellery that has gold worth $200 at the current spot price for refined gold (for example, gold bullion) and silver worth $50 at its current spot price. The combined value of the valuable metal is $250 and therefore 110% of the value of the valuable metal is $275. The piece of jewellery is sold for $330 to a registered jewellery business. The market value of the goods on a GST exclusive basis is therefore $300. The reverse charge does not apply to this business-to-business transaction as the price is greater than 110% of the valuable metal content. However, the manufacturer and registered jewellery business have the option to reverse charge these transactions. More examples here: https://www.ato.gov.au/Business/GST...harge-in-the-valuable-metals-industry/?page=4
